CTIA asks Congress to pass Cell Tax Fairness law
April 16, 2008
Joe Farren is assistant vice president of public affairs at CTIA – The Wireless Association
CTIA-The Wireless Association is backing a Congressional bill to impose a five-year moratorium on new discriminatory state and local wireless taxes.
The Cell Tax Fairness Act bill, sponsored by Representatives Zoe Lofgren (D-CA) and Chris Cannon (R-UT), was introduced Tax Day April 15 in the U.S. House of Representatives.
“What has happened over the years is that localities, states and counties have looked to wireless to raise taxes,” said Joe Farren, assistant vice president of public affairs at CTIA, Washington. “So they’re passing wireless-specific taxes and they’re not taxing other sectors.
“We’re not saying wireless consumers should not pay any tax,” he said. “We’re saying don’t discriminate against wireless consumers by forcing them to pay wireless taxes.”
An estimated 15 percent of each consumer’s monthly wireless bill goes toward taxes and fees. This is twice the 7.1 percent rate imposed on other competitive goods and services subject to sales tax.
In fact, a recent study on taxation of wireless service in the United States confirmed that, between 2003 and 2007, taxes and fees on wireless services increased four times faster than taxes on other goods and services.
The CTIA’s Mr. Farren pointed out another anomaly in taxation: the fancier the phone, the higher the tax.
“The more innovative the device, the higher the tax – and it should be just the opposite,” he said.
Consumers should not have to bear this “substantial, unfair tax burden,” the CTIA said. Policymakers should roll back taxes on these wireless customers, the association urged.
“The wireless sector of the technology industry continues to be an important driver for growth in our nation’s economy,” said Verizon Wireless president/CEO and CTIA chairman Lowell McAdam in a statement.
“Americans don’t just talk on their wireless phones anymore,” he said. “They access the Internet, get information, pay bills and use wireless to be more productive at work and other every day activities.”
New research from CTIA released this month shows that as of yearend 2007, the U.S. had more than 255 million wireless users, or roughly 84 percent of the nation’s recorded population.
The same wireless industry survey also indicated a huge jump in SMS usage. More than 48 billion text messages were reported for December 2007, or 1.6 billion messages a day. This was a 157 percent increase over December 2006.
Also, a report issued in March by the Federal Communications Commission claimed that in contrast to other platforms for high-speed Internet service, mobile wireless accounted for more than 68 percent of the overall growth in high-speed lines from June 2006 to June 2007.
The CTIA is lobbying hard to push for the passage of the bipartisan Cell Tax Fairness legislation which comes just as mobile marketing is evolving into a viable industry of its own.
“There is a tax barrier that exists for many consumers and this is increasingly problematic when you consider how many users are turning to wireless to meet their broadband needs,” Mr. Farren said.